Conclusion
At the working group meeting, POUs raised concerns regarding the information obstacles that they assert they face in their attempt to adequately negotiate a CRS billing and collection solution with the IOUs. According to the POUs, two of the more notable obstacles are the lack of directive from the Commission dealing with the pending Petitions for Modification, and the lack of MDL CRS estimates. However, the Energy Division finds that the overall lack of progress made, even for the transferred MDL CRS billing and collections negotiations, to be somewhat troublesome in light of legislative direction concerning this issue.6
At the January 31, 2005 workshop, POU representatives stated that negotiations, at least for transferred load, were not only desirable by all parties, but also feasible. Yet, at the end of the discussions at the April 14th meeting, these same parties stated that they are not in a position to negotiate for the POUs they represent and that the POUs themselves would need to contact the IOUs in order to negotiate bilateral agreements.
The Energy Division, taking into account the obstacles cited by the POUs and the IOUs' desire to see negotiations come to an end, stated that it would indicate in this status report that the parties had decided at the working group meeting that additional negotiation meetings would not take place until the finalization of a Decision, or Decisions, addressing the pending Petitions for Modification concerning MDL CRS billing and collection issues.
Participants agreed that fifteen days after the date on which such Final Decision, or Final Decisions, addressing the petitions are adopted, PG&E should report to the Commission's Energy Division the number of POUs that have contacted PG&E expressing an interest in negotiating MDL CRS billing and collection solution. Edison should also report this information to the Energy Division in the same manner.
The Energy Division also stated that it would like to see PG&E file a supplement to update Advice Letter 2433-E, E-A or E-B, as necessary, in order to advance a process to bill and collect the MDL from applicable MDL transferred load customers that do not initiate settlement talks with the relevant IOU.
PG&E stated that it would like to encourage the Commission to lift the suspension from PG&E's Advice Letter 2483-E that would enable it to proceed with trying to collect the CRS from new departing load. Based on the discussions at the meeting, the Energy Division agrees with PG&E. In the event that negotiations between the POUs and the IOUs do not succeed - or are not even attempted - the Commission needs to have an approach ready to collect NBCs from new departing load.
Contrary to the statements of the POU representatives at the January 31st workshop, it now appears that a dual track MDL CRS billing and collection process can no longer be seen as possibly creating a disincentive for the IOUs to negotiate in good faith with the POUs. Such a dual track approach may now provide a benchmark to the POUs for purposes of deciding whether individually negotiated bilateral agreements are feasible and worthwhile, given each POU's unique circumstances, possibly helping move along negotiation discussions for those POUs that are interested in doing so.
ATTACHMENT 1
~ Talking Points ~
During the April 4 teleconference sponsored by the CPUC Energy Division, CMUA was asked to provide a document describing its thoughts on certain issues affecting bilateral agreements regarding the billing and collection of Municipal Departing Load CRS. This document sets forth talking points for further discussion at the April 14 workshop. The views expressed in this document are those of CMUA, and do not necessarily represent a consensus view among POUs. CMUA hopes that this document, and the document to be produced by PG&E, can be used as means of spurring discussion among all parties at the April 14 workshop.
1. The CPUC should act as soon as possible on the pending Petitions for Modification of CMUA and Merced and Modesto Irrigation Districts so that parties may understand the scope of CRS affecting Transferred MDL and New MDL.
· Implementation activity occurring in advance of the CPUC's decision may necessitate future modifications based on the outcome of the decision.
2. The POUs will review and consider the terms and conditions proposed by PG&E in its April 13 draft document.
· The April 14 workshop provides an initial opportunity for the POUs to provide feedback on the document.
· Given the variations among the POUs and circumstances involving Municipal Departing Load, the CPUC and the IOUs should not expect that a generic, pro-forma agreement will satisfactorily address all situations. However, such a document could be useful as a catalyst for individual discussions.
3. The POUs may individually discuss and pursue agreements to address billing and collection issues with the IOUs.
· Since New MDL and Transferred MDL are not the same, individual POUs should not be precluded or discouraged from resolving Transferred MDL issues independently of New MDL issues. (Currently, at least one POU is being told by an IOU that the IOU will not contractually address Transferred MDL issues unless New MDL issues are also addressed in the same agreement.)
4. It appears to be overly optimistic to assume that the myriad of New MDL issues can be addressed in a manner that allows significant progress to be made on agreements in advance of the CPUC's decision on the pending Petitions for Modification.
· Nothing, however, should prevent individual POUs from discussing their respective situations with IOUs with the hope that mutually acceptable agreements can be developed.
ATTACHMENT 2
MUNICIPAL DEPARTING LOAD BILLING AND COLLECTION AGREEMENT
This Municipal Departing Load Billing and Collection Agreement ("Agreement") between Investor-Owned Utility ("IOU") and Publicly-Owned Utility ("POU") addresses the billing and collection by POU of certain Non-Bypassable Charges ("NBCs") from customers that take electric service from POU but owe NBCs to IOU. IOU and POU are collectively referred to herein as the "Parties" and individually referred to as a "Party."
RECITALS
WHEREAS, on January 17, 2001, Governor Davis declared a "state of emergency" resulting from dramatic increases in the price of wholesale electricity that threatened the solvency of the state's electric investor-owned utilities ("IOUs");
WHEREAS, in response to the emergency, the Legislature enacted Senate Bill 7 from the First Extraordinary Session of 2001-2002 (SB 7X) and then Assembly Bill 1 (AB 1X), authorizing the Department of Water Resources ("DWR") to begin purchasing power on behalf of electric consumers in the service territories of the state's IOUs and suspending the right of electric customers to switch from IOU service to direct access service;
WHEREAS, on January 14, 2002, the California Public Utilities Commission ("Commission") instituted a new rulemaking (R.02-01-011) to implement the suspension of direct access pursuant to AB 1X;
WHEREAS, the Commission's rulemaking initially focused on the responsibility of direct access customers for the DWR Bond Charge, DWR Power Charge, Competition Transition Charge, and Southern California Edison's Historical Procurement Charge - collectively referred to as the cost responsibility surcharge ("CRS") - the scope of the Commission's inquiry was expanded on March 29, 2002, to include the responsibility of "departing load" customers for those same charges;
WHEREAS, in Decision 02-11-022, the Commission determined that February 1, 2001 (the date DWR began procuring power on behalf of the state's IOUs) should be the "cut-off" date for establishing direct access customers' responsibility for the CRS;
WHEREAS, the Commission subsequently issued a series of decisions, including
Decisions 03-07-028, 03-08-076, 04-11-014, and 04-12-059, holding customers previously served by IOUs but subsequently taking service from publicly-owned utilities ("POUs"), as well as customers never previously served by IOUs but taking service from POUs within the IOUs' historic territory, responsible for some or all of the CRS components;
WHEREAS, the Commission held a workshop on January 31, 2005, on billing and collection issues, and various POUs indicated that they would be willing to consider entering into bilateral billing and collection agreements with the IOUs on a purely voluntary basis;
WHEREAS, the Commission's Administrative Law Judge in R.02-01-011 issued a ruling on March 28, 2005 directing IOUs and POUs to proceed with negotiations for bilateral agreements for cooperative billing and collection of CRS and other charges from departing load customers;
NOW, THEREFORE, IOU and POU agree to as follows:
6 See PU Code Section 366.2(d) (d)(1) It is the intent of the Legislature that each retail end-use customer that has purchased power from an electrical corporation on or after February 1, 2001, should bear a fair share of the Department of Water Resources' electricity purchase costs, as well as electricity purchase contract obligations incurred as of the effective date of the act adding this section, that are recoverable from electrical corporation customers in commission-approved rates. It is further the intent of the Legislature to prevent any shifting of recoverable costs between customers.
(2) The Legislature finds and declares that this subdivision is consistent with the requirements of Division 27 (commencing with Section 80000) of the Water Code and Section 360.5, and is therefore declaratory of existing law.
